Notice regarding signing of share exchange agreement for making SMBC Friend Securities into a wholly-owned subsidiary of SMFG(1/1)

Sumitomo Mitsui Financial Group, Inc.

Sumitomo Mitsui Banking Corporation

SMBC Friend Securities Co., Ltd.

Notice regarding signing
of share exchange agreement for making

SMBC Friend Securities into
a wholly-owned subsidiary of SMFG

TOKYO,
April 28, 2006 --- Sumitomo Mitsui Financial Group, Inc. (SMFG), Sumitomo
Mitsui Banking Corporation (SMBC), and SMBC Friend Securities Co., Ltd. (SMBC
Friend Securities), a subsidiary of SMBC, announced that SMFG and SMBC Friend
Securities had signed a share exchange agreement to make SMBC Friend Securities
into a wholly-owned subsidiary of SMFG, subject to regulatory approval of an
application to be submitted pursuant to Article 52-23, paragraph 3 of the
Banking Law, in accordance with decisions of each company’s board of directors
at meetings held today.The signing
is based on the basic agreement the three companies entered into on
March 30, 2006
.

1.Purpose of making SMBC
Friend Securities a wholly-owned subsidiary of SMFG

In
accordance with the stabilization of the Japanese financial system, Japanese
households’ portfolios have shown clear signs of a shift from savings to
investment, and their investment

needs
are expected to become further diversified. At the same time, we believe that new
types of asset management services will become popular among individual
investors who improve their financial knowledge and have an increased interest
in portfolio management based on asset allocation concepts.

In
view of these trends, SMFG will further strengthen cooperation among group
companies by making SMBC Friend Securities a wholly-owned subsidiary, establishing
a new business model distinct from the conventional one by combining banking and
securities businesses and maximizing synergies between them.With such initiatives, SMFG will try to
make every effort to enhance the enterprise value of the whole group.

In
particular, SMBC will provide fund wrap services through collaboration with SMBC
Friend Securities.Furthermore,
SMFG will accelerate the exchange of personnel between SMBC and SMBC Friend
Securities and expand the consulting services of SMBC Friend Securities to SMBC’s
individual customers who are interested in investments in individual stocks.

(Note) 1. The effective date of share exchange
may be changed if SMFG and SMBC Friend Securities so agree.

2.SMFG will conduct the share exchange
without obtaining approval at its general shareholders’ meeting, since this share
exchange is deemed a “simple share exchange” under Article 358 of the
Commercial Code of Japan.

(2)Share exchange ratio

SMFG

(Parent company)

SMBC Friend Securities

(Wholly-owned
subsidiary)

Share exchange ratio

1

0.0008

(Note 1)
Allotment ratio

0.0008 shares
of SMFG will be allotted to 1 share of SMBC Friend Securities.

(Note 2)
Basis for determination of share exchange ratio

SMFG
appointed Goldman Sachs (
Japan
)
Ltd. (“Goldman Sachs”) as its financial advisor and SMBC Friend Securities appointed
Merrill Lynch Japan Securities Co., Ltd. (“Merrill Lynch”) as its financial
advisor in connection with the transaction.SMFG and SMBC Friend Securities comprehensively
considered numerous factors including results of the analyses provided by their
respective financial advisors, and discussed and agreed to the above.

(Note 3) Methods
of and basis for calculation by financial advisors

Goldman Sachs analyzed the share exchange ratio based on, among other
things, review of market price trends of the common stock of SMFG and SMBC
Friend Securities, a discounted cash flow analysis, a selected companies
analysis and a selected transactions analysis.

Merrill Lynchanalyzed
the share exchange ratio based on a comprehensive judgment using a market stock price analysis, a discounted cash flow analysis, and a comparable
companies analysis.

(Note 4) Number
of new shares to be issued by SMFG

Common stock:
249,015 shares

(3)Listing after share exchange

SMFG will hold 100%
ownership of SMBC and remain listed.On the other hand, SMBC Friend Securities will become a wholly-owned
subsidiary of SMFG and be delisted on
August 28, 2006
.

(4)Cash to be paid upon share exchange

No cash will be paid in
connection with the share exchange.

(5)Situation after share exchange

(a)Corporate name, business, head office,
and representative

The corporate names,
businesses, head offices, and representatives of SMFG and SMBC Friend
Securities will remain unchanged from the description in the “Overview of SMFG
and SMBC Friend Securities.”

(b)Capital stock

SMFG’s capital stock
will not increase as a result of the share exchange, while SMFG’s capital
reserve will be increased by the allowed maximum amount calculated pursuant to Article
357 of the Commercial Code of Japan.

(c)Impact on financial results

The share exchange will
not affect SMFG’s consolidated earnings for this fiscal year since SMBC Friend
Securities is already a consolidated subsidiary of SMFG.On the other hand, SMFG believes that it
can further promote cooperation among group companies by making SMBC Friend
Securities a wholly-owned subsidiary and by maximizing synergies between the banking
and securities businesses, thereby improving its future consolidated financial
results.

(d)Treatment of fractional shares

Cash, instead of
fractional shares of SMFG, will be distributed to shareholders of SMBC Friend
Securities who have the right to receive fractional shares of SMFG as a result
of the share exchange, in accordance with Article 234 of the Japanese Commercial
Code of Japan.

Overview
of SMFG and SMBC Friend Securities

（As of September 30, 2005(*1), non-consolidated basis）

Parent company

Wholly-owned subsidiary

Company
name

Sumitomo Mitsui Financial Group, Inc.

SMBC Friend Securities Co., Ltd.(*2)

Business
description

Management of
the affairs of subsidiaries and relevant ancillary functions

SMBC,
a wholly-owned subsidiary of SMFG, holds 40.35 % of the total outstanding
common shares of SMBC Friend Securities.

Personnel
relationship

No
one concurrently holds a position of director in SMFG and SMBC Friend
Securities.

Business
relationship

There
is no business relationship between SMFG and SMBC Friend Securities.

Financial Results of the
past 3 fiscal years

Fiscal year

FY2003

ended
March 31, 2004

FY2004 ended
March 31, 2005

1st half of FY 2005 ended
September 30, 2005

FY2003 ended
March 31, 2004

FY2004 ended
March 31, 2005

1st half of FY 2005 ended
September 30, 2005

Operating income (millions of yen)

55,515

258,866

16,206

48,342

52,304

27,299

Operatingprofit (millions of yen)

52,470

256,222

14,468

18,806

18,042

9,795

Ordinary profit (million of yen)

51,188

253,448

12,424

19,104

18,323

10,031

Net income (millions of yen)

50,505

252,228

38,435

15,417

13,201

6,352

Net income per share (yen)

3,704.49

38,302.88

5,646.36

52.49

42.37

20.56

Dividend per share (yen)(*4)

3,000

3,000

−

12.00

12.00

−

Stockholders’ equity per share (yen)

232,550.74

257,487.78

268,549.24

345.25

402.58

413.29

(*1)SMBC
Friend Securities announced its most recent financial results, as of March 2006,
today. However, in light of time constraints, SMBC Friend Securities listed its
financial results as of September 2005 for purposes of the above overview.